A military site gifted to the Northern Ireland government to boost the peace process was sold for £1 million below its estimated value, only to be resold the same day by the new owner, an audit report has revealed.

A military site gifted to the Northern Ireland government to boost the peace process was sold for £1 million below its estimated value, only to be resold the same day by the new owner, an audit report has revealed.

The Malone Road barracks was situated in the leafy south Belfast suburbs, where luxury apartments built on the site set a new high for property pricing at the time.

But the report by the Northern Ireland Audit Office found that the deal failed to maximise the potential benefits of the sale, or include a "clawback" measure to secure a share of future profits.

The former army base, one of a number handed to the Stormont Executive by the British Government, was sold for £3.8 million in October 2003 around seven months after the site was transferred to the Office of First Minister Peter Robinson and Deputy First Minister Martin McGuinness., despite having been valued at between £4.3 million and £4.6 million.

Stormont officials rejected many of the criticisms of the transaction, but the auditors also said it was not possible to establish that the proceeds of the sale were ring-fenced to be used to boost the peace process, which was a condition attached to the transfer of the site.

The highly critical report cites concerns over the handling of the other military sites which include Ebrington barracks in Londonderry, Magherafelt barracks in Co Derry, Crumlin Road Gaol in Belfast, plus the sprawling site of the former Maze/Long Kesh top security prison.

But in its hard hitting review of the Malone deal, the report cited evidence that: "Following the sale of the site to the successful bidder, it was immediately sold to another development company on the same day. We are unable to establish the onward sale price.

"However, in December 2005, that company was granted full planning permission and construction work was completed on 74 apartments and penthouses in June 2007. The development was reported as setting a new high for property pricing per square foot in Belfast at £500."

The Office of First Minister and Deputy First Minister (OFMDFM) contested the criticisms.

The report said: "They contend that; in the absence of any hard evidence such as a higher onward sale price, or whether the onward sale was to a connected or unconnected party; our concerns that best value was not obtained for the site are unsupported. They also added that the selling on to another developer in these circumstances is not an unusual occurrence in the market place."